Villa v. NLRC & National Steel Corporation 14 January 1998; Romero, J. Digest prepared by Jethro Koon I.

Facts

National Steel Corporation (NSC) in Cagayan de Oro, in the first part of an expansion program, constructed a Billet Steelmaking Plant. The plan was to first use scrap metal by shipbreaking decommissioned ships before converting to the plant to a Direct Reduced Iron plant.

A billet is a semi-finished steel product later processed into steel bars and wire rods. Shipbreaking means cutting up/salvaging ships and reprocessing the steel.

However, after four or five ships, the project was phased out because of the scarcity of vessels/ships for salvaging, the higher costs of operation, and the unsuitability of raw materials. It was not a viable undertaking. The petitioners are the former employees of the plant, being masons, carpenters, laborers, electricians, and painters. Even before the plant was phased out, there were already many labour problems. Notably, there was a strike complaining of (a) wage discrimination, (b) interference with the employees right to self-organization, (c) nonregularization of contractual employees, (d) illegal termination of employees, (e) nonpayment of wage/benefit differentials, and (f) nonrecognition of NSCEASPFL as the sole bargaining representative of the company. The petitioner-workers continually lost in the case with respect to regularization (they were awarded wage increases) from the Labor Minister to the NLRC despite numerous MRs. The initial proceedings (1986) simply ordered NSC to submit their complete records for the tribunals to be able to make a definite ruling, in the meantime making a provisional ruling that the petitioners were project employees. The correctness of this order was affirmed by the SC in an earlier case and remanded it back to the NLRC. This decision by the NLRC (1992) affirmed their earlier resolution that the petitioners were merely project employees. In the dispositive, it said that the individual rulings as to which petitioner is contractual and which is regular, will be the subject of future proceedings. A break-away group from the former group of petitioners MR this with the NLRC twice before raising the present case to the SC for grave abuse of discretion. Note that if declared to be regular, the petitioners would be reinstated.

II. Issues Are the petitioners regular employees or project employees? To be noted are the following points that the petitioners raised:

NSC re-engaged the services of some of them. The operation of the plant involved numerous projects (numerous ships). Their employment contract were contracts of adhesion vis-a-vis with the financial necessity of finding work. The petitioners worked with regular employees.

III. Holding Petition dismissed. Petitioners are project employees. NLRC decision affirmed. IV. Ratio SC relies on the factual findings of labor administrative tribunals like the NLRC which have acquired expertise because their jurisdiction is confined to specific matters. In its Decision and Resolutions, the NLRC adamantly held that petitioners were contractual project employees who are not entitled to regularization under Art. 280. 280 conceives of three kinds of employees:

regular employees or those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; project employees or those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season, and casual employees or those who are neither regular nor project employees.

In the earlier case with the same parties, the Court distinguished between two types of projects: a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. (construction company that may undertake two or more projects at the same time in different places) a project may refer to a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. (instant case; expansion program being different component projects a distinct undertaking identifiable from the ordinary business and activity of NSC)

The Supreme Court disposed of the regularization issue by reasoning that though:

The records show that the petitioners were utilized in operations other than billet making or other components of the expansion porgram, such as shipbreaking. And while it is true that they performed other activities which were necessary or desirable in the usual business of the NSC And that the duration of their employment was for a period of more than one year. These factors did not make them regular because:

They remain project employees regardless of the number of projects in which they have worked. Length of service is not the controlling determinant of the employment tenure of a project employee. In the case of Mercado, Sr. v. NLRC, it was ruled that the proviso in the second paragraph of Article 280, providing that an employee who has served for at least one

year, shall be considered a regular employees, relates only to casual employees and not to project employees. V. Addendum Only Note that the NLRC disposed of the regularization issue thus:

The test in determining regularity or employment is the nature of the functions performed which should be `usually necessary or desirable in the usual business or trade of the employer. NLRC broke this statement down to:

necessary or desirable, and usual business or trade of the employer

The law distinctively requires that the functions and services performed should be `common and constant and an every day activity. Stated otherwise, the law mandates that the functions to be carried out must be `customary to the trade or business of the employer. This rule is, however, subject to exemptions.

Where an employment or activity despite being usually necessary or desirable has been fixed for a specific project or undertaking the completion of which has been `predetermined at the time of engagement or where the services to be performed is seasonal in nature, the same is still considered `casual or `temporary in nature.

The SC disposed of the other points of the petitioners thus:

Re-engagement: affirmed NLRC that employers choice of persons to hire is a management prerogative that is beyond its competence to question. Adhesion: employment. Project employment contracts are not lopsided agreements in favor of only one party thereto. The employers interest is equally important as that of the employees for theirs is the interest that propels economic activity. While it is true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts do not, necessarily, prejudice the employee.

The employer is allowed by law to reduce the work force into a number suited for the remaining work to be done upon the completion or proximate accomplishment of the project. However, the law requires that, upon completion of the project, the employer must present proof of termination of the services of the project employees at the nearest public employment office. This is specially provided for as regards construction workers obviously to obviate indiscriminate termination of employment in derogation of the workers right to security of tenure.

After the termination of the project, an employer may wind up its operations only to complete the project.